How Small Businesses Are Fighting the Gender Pay Gap

How Small Businesses Are Fighting the Gender Pay Gap

Many people today, especially those in their 20s and 30s, may find it surprising to discover that women are still fighting for equal pay. The fact is that the problem is still one that plagues the nation. Women are notoriously paid less than men for the same positions within the same companies when performing the same jobs. It doesn’t seem quite right, does it?

As a small business owner, it’s up to you to put your foot down and say “enough is enough.” You may already have a workforce, and you could be guilty of paying women less without even having given it much thought.

October is Women in Small Business Month. Now is as good a time as any to take a look at your payroll and find out if you have been putting your money where your mouth is, so-to-speak. You’re the owner of your company; you can make the changes necessary to ensure that your employees are not only being paid fairly, but equally.

Here are steps that small businesses have already begun to take to ensure the gender pay gap is a thing of the past. Use some of these ideas within your own walls.

1. Review Compensation

As we have already said, now is a good time to open the books and learn just how much your employees are being compensated for the jobs they do. If you are utilizing human resources software, this task won’t be difficult at all. Modern software allows you to segment salaries with a click of your mouse.

Look at the rates of pay for your employees, but look beyond monthly compensation. Take a look at the benefits you are giving your workforce, including bonuses and the amount of overtime you are providing. If things aren’t balanced, it’s time to make some changes.

2. The Ladder

It’s not unusual for men to outnumber women in various levels of management. If you have a structure of supervisors in place within your company and it is mostly male-dominated, you may have a problem. Ask yourself why there aren’t more women on your management team.

Conversely, if there are more women than men, that’s something to look at a bit more closely. There is nothing that says someone must be hired or promoted simply because of their gender, but if you rely more heavily on one gender or the other and you have several qualified people, ask yourself if you are holding onto a bias that is better let go.

3. Hiring Practices

It’s not unusual for businesses to hire employees and then base their salary on what they were making at previous jobs. If you are in this habit, it may be time to break it. Because women are historically compensated in a way that is less than their male colleagues, you could be paying women less without intention. You could also be causing a pay gap if your small business aggressively negotiates the salary of new hires. You may end up paying people unfairly or differently for the same responsibilities.

4. Be Transparent

There is an old rule that has gone unsaid (and sometimes said) for ages: Don’t discuss your salary. Workers across the nation believe that if they discuss their salary with one another, they could be terminated. What is the big secret? What are companies so afraid of? Chances are, they don’t want their employees to discover the gaps that exist in pay.

Adopt pay transparency in your company. One of the easiest ways to do this is to establish a pay scale that is tiered. For example, each entry-level employee in a department or role may make X amount. After a year, they are bumped to whatever you determine. Do the same with bonuses and benefits. You may think this will backfire on you, but you’ll probably see the opposite effect. What pay transparency tends to do is make employees more productive. When an employee knows what they could be earning as a bonus or even as a supervisor, they are more apt to work harder to obtain that pay.

5. Don’t Negotiate

Once you set up your pay scale, don’t negotiate. It can be a difficult thing to do, especially when you feel as though you may be losing out on a talented recruit because you refuse to stray from your pay scale, but equality in pay demands that you stick to what you decide.

One study found that female graduate students seeking a specific job only negotiated for a higher salary in 7 percent of cases. On the other hand, men negotiated for more pay in 57 percent of instances. Women report that they fear they won’t be looked upon favorably if they aggressively pursue a higher rate of pay.

Forbes magazine offered a great example of this. If a man and woman both start a job at the age of 22, but the man negotiates for a $5,000 higher rate of pay per year, and each receives a 3 percent pay raise each year, the gap between the two employees’ salaries would be $15,000 by the time they are ready to retire.

The pay gap between genders will only be erased when people make a conscious effort to do so. If you own a small business, it’s up to you to ensure that your employees are paid fairly, no matter their gender.

One of the most important parts of intentionally closing the pay gap is knowing exactly what you’re paying your employees. We offer accounting services for small businesses so you can keep track of your money. Contact us today to learn more about all the products we offer in our software suite, or to start a free trial of our premium package.